Pediatrician, writer, and medical school professor Aaron Carroll MD discusses the evidence that Medicaid has a large positive return on investment.
If you’re still young and healthy — just you wait — you might be among the people who get Medicare and Medicaid confused. Medicare pays some of the cost of medical care for people 65 and older and for people with serious kidney disease. (In the U.S., I mean; in Canada it’s for everybody, and similar terms are used in other countries, but I digress.)
Medicaid is for very low-income people and for elderly persons in nursing homes who have no other way to pay for it. In fact, most Medicaid spending, like almost all Medicare spending, goes to services for the elderly, so there’s overlap between the programs.
Medicare is financed by federal taxes and partly by premiums paid by the insured. Medicaid is a joint federal-state program with eligibility rules and benefits that vary state by state. The Affordable Care Act expanded Medicaid eligibility so that, for example, low-income people without dependent children could get coverage (which was not the case in many states). The additional cost of expanded Medicaid are paid almost entirely by the federal government, with states contributing at most ten percent.
However, a questionable Supreme Court decision held that states not wishing to follow the new rules could keep following the old ones even thought the law had changed. The result is that in 19 states many impoverished people have no way to pay for medical bills. Depending on their condition they go without care or they get hospital care that they don’t pay for, which means the losses are passed through to the rest of us in the form of higher hospital bills or picked up by the state government. In practice, states that refuse to expand Medicaid are actually losing money, which is why a series of anti-Obamacare Republican governors and legislatures have come around to grudgingly accept Medicaid expansion.